Whether it be saving for a holiday or putting money away for a deposit, you probably have some sort of financial goal in the short, medium or long term. Keeping yourself accountable is key, so how should you go about giving yourself some milestones on the way to success?
Making financial resolutions are a simple way of helping you achieve your personal goals for the future, getting yourself that much closer to the life you want.
Keep your goals on track
To maximise the chance of making good financial resolutions and sticking to them, the SMART model is a helpful guide to define your objectives and how to achieve them;
- Specific –so you know exactly what you’re aiming for and how you are going to get there, give yourself a specific number;
- Measurable – enabling you to keep track of your progress and assess how closely you have really met your goal. This might be setting up a weekly direct deposit into a savings account or creating a budget to track your daily expenses. There are some great tools out there like the ASIC’s MoneySmart Budget Planner;
- Achievable – so that you can take on the challenge with confidence and not become overwhelmed by a task that is too ambitious. There’s little point in aiming to save $10,000 in a year if you only have $500 left over after your living and discretionary expenses and no other source of revenue. Do the calculations before you set your final goal. If you’re looking to finance your goal, you can try our loan calculator;
- Realistic – you may be thinking, ‘how is this different to achievable?’. It’s all to do with circumstance. Theoretically, it may be achievable to save a $50,000 deposit with your partner on your salaries, but is it realistic when you have three children and their associated costs? Also think about what you can’t do without, it may be achievable to cut out your morning take-away coffee and save the money instead, but realistically will you actually do this?; and
- Time-bound – by giving yourself deadlines, it’s a healthy bit of pressure to keep you on track for your goals. Think about whether your goal is short, medium or long term and mark out milestones along the way. When you meet them, make sure you celebrate!
Keep yourself motivated with these three simple tips:
- Attach a powerful reward and cause to every financial goal – unsurprisingly for many people, achieving a financial goal isn’t as exciting as they thought it would be. Attaching a personal or family reward such as a vacation, new bit of technology or a wardrobe upgrade to each financial goal ahead of time will keep you inspired and committed along the way.
- Concentrate your energy – focus on one aspect of your financial life at a time. If your resolution is to decrease your credit card debt, focus on paying down the credit card with the highest interest rate first. It can be difficult to save more whilst also paying off your debts, but in the long run you will have less debt and therefore more money to save towards your goals.
- Remove temptation – Freezing a credit card in a block of ice or setting up automatic debt repayments will help you achieve your goals with less effort. Creating barriers to your savings or credit card will mean that you have time to really consider whether you need that new phone or pair of shoes.
Putting these steps into action, you should find it much easier to set up and stick to realistic goals. Contact us so we can talk about how we can help you achieve your financial resolutions this year.